Merger company does not change. In acquisition a

Merger means “to combine”. Merger occurs by the combination
of two equal companies to become one entity. There directors are shareholders.

 

What is
Acquisition?

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Acquisition means “to acquire”. Acquisition occurs when large company acquires small
firm. The name and legal structure of large company does not change.  In acquisition a takeover is preplanned and orderly
mannered in which both parties strongly agreed.

Types of merger:

There are few
types of merger include:

1.     
Horizontal
merger

2.     
Vertical  merger

3.     
Market
extension merger

4.     
Product
extension merger

5.     
Conglomeration

 

Horizontal merger: 
A horizontal merger two companies compete each other and share product
lines and market.

Vertical merger: A vertical merger takes place
between two companies which are producing different good or providing different
services.

Market extension merger: Two companies
choose different markets to sell same product.

Product extension merger: Two companies
choose same market to sell different products.

Conglomeration: In this merger the business of
both companies does not relate each other.

 

Why companies
merge with or acquire other companies?

·        
Companies
want to produce product at lower cost and want to increase their performance.

·        
In
merging and acquiring companies have an opportunity to grow market shares.

·        
In
merging and acquiring executives want to eliminate future competition to grow
their market.

·        
Financial
crisis and lower demand of product is main reason of merger and acquire.

 

Some reasons merger and acquisition fail:

·        
There
is poor communication between the employees of two companies having same rank.

·        
Sometimes
culture differences create problem.

·        
Internet
conflict occurs between executives and employees.

·        
New
dress code and time recording procedures irritate many employees.

·        
Changing
in human resource policies create problem and sometimes high performing
employees quit their job.

 

Advantages of merger and acquisition:

·        
Production
is increase for larger period of time and buyer power is increase.

·        
Merger
and acquisition use innovative techniques to decrease financial risk.

·        
By
merging or acquisition production of the business becomes less expensive and
more profitable.

·        
It
will be less expensive to buy a business instead of expending their own
business.

·        
The
CEO’S can easily share their skill and knowledge.

 

Purpose of acquisition
and merger:

The main purpose
of merger is to decline competition and increase operational efficiency and the
main purpose of acquisition is to increase development.